Michael N. Palm, Sr., Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-0935

Michael N. Palm, Sr.,
Appellant,

vs.

Bernie McBain,
Respondent.

Filed June 4, 2018
Affirmed
Connolly, Judge

Hennepin County District Court
File No. 27-CV-15-9924

Michael N. Palm, Sr., Wayzata, Minnesota (pro se appellant)

Kay Nord Hunt, Michael C. Glover, Jason E. Engkjer, Lommen Abdo, P.A., Minneapolis,
Minnesota (for respondent)

Considered and decided by Connolly, Presiding Judge; Smith, Tracy M., Judge; and
Bratvold, Judge.

U N P U B L I S H E D O P I N I O N
CONNOLLY, Judge
Appellant challenges the judgment granted to respondent after a court trial on
appellant’s claims of breach of fiduciary duty and misrepresentation by omission, arguing

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that the record does not support the district court’s findings that respondent’s breaches of
fiduciary duty did not cause appellant’s damages and that appellant did not rel y on
respondent’s omissions. Because ample evidence supports the district court’s findings, we
affirm.
FACTS
In 2006, appellant Michael Palm and respondent Bern ie McBain formed Rink
Properties LLC (Rink) and 88s Rink LLC (88s) (collectively, Rink Entities) to start an ice
arena. Appellant and respondent were the managing partners, officers, members, and
directors of Rink Entities. Rink Entities borrowed money from a group of five lenders; the
loan was repaid.
Appellant individually had previously borrowed from four of those lenders, who
had formed TNNL Capital Inc. (TNNL), for his own purposes. In 2004, he borrowed
$225,000 and $500,000; in 2005, he borrowed $350,000, and in 2006, he increased the
$500,000 note to $808,131.94. In 2007, appellant defaulted on his loans. He gave TNNL
a confession of judgment, entered into the 2007 Forbearance Agreement, and later
defaulted on that agreement.
In 2008, TNNL agreed to the 2008 Forbearance Agreement, which required
appellant to repay a consolidated loan of $1,150,000 by December 31, 2008, and to pledge
his shares in Rink Entities. Respondent executed two Joinder of Member statements
consenting to appellant’s pledge of his shares in Rink Entities. Appellant defaulted on the
2008 Forbearance Agreement.

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In 2009, appellant promised TNNL that he would provide a guarantor and pay the
loans and interest, but he did neither. TNNL decided to foreclose on appellant’s shares in
Rink Entities, and a foreclosure sale was scheduled for June 2009.
In May 2009, respondent received a call from a principal of TNNL, who asked
respondent if he was interested in purchasing appellant’s shares. Respondent said he was
interested. TNNL foreclosed on appellant’s s hares and notifi ed appellant that it would
pursue enforcement of the confession of judgment; judgment was entered for TNNL
against appellant in the amount of $1,408,509.09. In December 2009, this amount was
reduced to $800,000 in the Stipulation of Settlement, in which a ppellant agreed to the
validity of the sale and said he had transferred all his known and unknown interests in Rink
Entities to TNNL.
In June 2015, appe llant, acting pro se, brought this action against respondent.
Following respondent’s motion to dismiss and appellant’s motion to amend the complaint,
two claims survived: breach of fiduciary duty and misrepresentation by omission. The
district court denied r espondent’s motion for summary judgmen t and, following a court
trial, entered judgment for respondent on both claims.
Appellant challenges th at judgment, arguing that the record does not support the
district court’s findings of fact and conclusions of law that appellant failed to prove the
causation requisite to his breach -of-fiduciary-duty claim and t hat respondent is not liable
to appellant for misrepresentation by omission.

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D E C I S I O N
In an appeal from a bench trial, we do not reconcile
conflicting evidence. We give the district court’s factual
findings gre at deference and do not set them aside unles s
clearly erroneous. However, we are not bound by and need not
give deference to the district court’s decision on a purely legal
issue. When reviewing mixed question of law and fact, we
correct erroneous applications of law, but accord the [district]
court discretion in its ultimate conclusions and review such
conclusions under an abuse of discretion standard.

Porch v. Gen. Motors Accept ance Corp ., 642 N.W.2d 473, 477 (Minn. App. 2002)
(alteration in original) (quotations and citations omitted), review denied (Minn. June 2,
2002).
1. Breach-of-Fiduciary-Duty Claim
The elements of a breach-of-fiduciary-duty claim are the same as the elements of a
negligence claim. Padco, Inc. v. Kinney & Lange , 444 N.W.2d 889, 891 (Minn. App.
1989). Those elements are: (1) a duty, (2) breach of that duty, (3) causation, and (4) injury,
harm, or pecuniary damage. Gradjelick v. Hance, 646 N.W.2d 225, 233 (Minn. 2002).
Respondent had a fiduciary duty to appellant under Minn. Stat. § 322C.0409, subd.
1 (2016) (providing that members of member-managed limited liability companies ow e
one another fiduciary duties ). The district court concluded that responde nt breached that
duty by informing a principal of TNNL, John Trautz, that respondent was interested in
purchasing appellant’s shares if TNNL foreclosed. But the district court rejected
“[appellant’s] assertion that the main reason TNNL executed on his Rink and 88s collateral
was that [respondent] informed TNNL that he was interested in purchasing [appellant’s]
shares” and concluded that “[respondent’s] interference with [appellant’s] efforts to avoid

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foreclosure or protect his shares [] did not cause [appe llant’s] ultimate loss of his shares.”
The district court continued,
It was [appellant’s] failure to satisfy his lenders [i.e., TNNL]—
and not any incidental interference by others —that resulted in
[appellant’s] loss of his interests in Rink and 88s. If [appellant]
had satisfied his loan with TNNL, or obtained a satisfactory
third party guarantee, TNNL would not have foreclosed on his
interests in Rink and 88s. TNNL did not have a collusive
agreement with [respondent] for [respondent] or the companies
[i.e., Rink and 88s] to purchase [appellant’s] shares in advance
of TNNL’s foreclosure sale.

To support this conclusion, the district court relied on the testimony of Trautz and
another TNNL principal, Steven Loe, noting “[They] testified, and the [district c]ourt finds,
that [appellant] had made too many broken promises, a situation which was exacerbated
by the pressure TNNL’s own banks were putting on them to make good on non-performing
loans. As a consequence TNNL scheduled a foreclosure sale . . . .”
The transcript supports the district court’s finding. Loe testified that he took over
dealing with appellant’s TNNL loans, that he had not met respondent, that respondent had
no part in TNNL discussions about requiring appellant to provide his sh ares in Rink
Entities as collateral; and that neither respondent nor respondent’s purchase of appellant’s
shares in Rink Entities had any influence over TNNL’s decision to foreclose.
Trautz testified that TNNL initially believed appellant could find ways to repay his
loans, that respondent was not part of and had no influence in TNNL’s discussions as to
what should be done with appellant’s unpaid loans , that respondent was not part of the
discussion or decision to foreclose on appellant’s Rink Entities sha res, and that there was

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no prearranged sale of the share to respondent and no discussion of the price of the shares
with him.
Thus, the district court’s finding that respondent was not the cause of TNNL’s
decision to foreclose was not clearly erroneous, and that finding supports the district court’s
conclusion that appellant did not show the causation necessary for his breach-of-fiduciary-
duty claim.
2. Misrepresentation-by-Omission Claim
A claim for misrepresentation by omission requires a showing that one party had a
duty to disclose and did not disclose a fact to another party, that the non disclosing party
intended the other party to rely on the omission, that the other party did rely on the
omission, and that the other party had pecuniary damage as a result of the reliance. See
Specialized Tours v. Hagen , 392 N.W.2d 520, 532 (Minn. 1986) (giving elements of
misrepresentation).
Appellant alleged in his complaint that “[respondent] deceitfully conspired with
[TNNL] to acquire [appellant’s] shares of membership units without disclosing or
communicating this secretive plan to [appellant ].” The district court found that “the
communications between TNNL (Trautz) and [respondent] occurred on or about May 15,
2009, only days before [respondent] informed [appellant] of the conversation. Further,
[respondent] informed [appellant] of his commu nication with Trautz prior to the date of
the foreclosure sale.”
Appellant provides no evidence other than his own speculative testimony to refute
this finding, and the transcript supports the finding. When Trautz testified that he recalled

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asking respondent if respondent had any interest in buying appellant’s shares, appellant
asked, “When was that?” and Trautz answered, “It was shortly before the foreclosure sale.”
Thus, there was no misrepresentation by omission in regard to that conversation.
Moreover, even if there had been such a misrepresentation, appellant does not
explain either how he relied on it or what pecuniary damage he suffered as a result of that
reliance. The record supports the conclusion that appellant failed to make a claim fo r
misrepresentation by omission.
Affirmed.